MUMBAI: The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged the Reserve Bank of India (RBI) not to dismantle the existing co-lending framework that allows non-banking financial companies (NBFCs) to originate loans and subsequently offload a bulk of those loans – up to 80 per cent -to partner banks.
This appeal comes as the central bank considers a significant shift to a joint lending model, where banks and NBFCs would be required to disburse loans together in real time, based on a single loan agreement.
In a letter to the RBI, FICCI warned that such a move would disrupt the co-lending ecosystem built under the current regime, often referred to as ‘Track 2’, which permits NBFCs to originate loans independently in accordance with a jointly approved credit policy and transfer most of the exposure to banks via direct assignment, with a waiver from the minimum holding period requirement.
What’s changing?
Current Model (Track 2): NBFCs originate and disburse loans. Banks buy up to 80 per cent of the loan portfolio later (direct assignment), which allows NBFCs to move quickly, especially in underbanked regions and niche borrower segments.
Proposed model: NBFCs and banks must co-disburse loans under a single agreement, simultaneously sharing credit risk and exposure from the beginning.
This may involve complex coordination and operational integration.
Why it matters
FICCI believes the proposed change could severely curtail credit flow to underserved customer segments, especially MSMEs and rural borrowers, where NBFCs have built strong origination capabilities.
The industry body also highlighted potential job losses, as NBFCs would be forced to scale down operations if their role is diminished under the new rules.
“The repeal of the November 5, 2020 circular would be highly disruptive… non-banks may have to scale back operations, leading to job losses,” the letter said.
In monetary terms, the model has delivered results—co-lending AUM touched Rs80,000 crore by March 2024, according to ICRA’s April 2025 report, underscoring the growing relevance of this model in last-mile credit delivery.
FICCI urged the RBI to preserve the Track 2 route to ensure continuity, citing its importance for financial inclusion, credit expansion, and economic stability.
